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National productivity plans

  • All nations need some form of productivity plan which outlines the broad thrusts their government intends to make to improve the well-being of the maximum number of its citizens – but most do not have such a plan, and the few that do don’t let their citizens know much about it

  • Cynics ask ‘why bother?’

  • Governments invariably get things wrong when they try to grow businesses – ‘most ministers have never run anything and couldn’t even run a whelk stall’

  • But there’s much that only governments can do to encourage and support private sector growth – one only has to look at the stellar results obtained by China, Japan and Singapore and the significant role their governments played

  • So where are we now?

  • According to The Times: “There’s no discernible moves to rebalance G7 economies towards higher added-value industries offering further GDP and prosperity growth”

  • In developed markets, more growth was being sought largely via QE (Quantitative Easing) and ZIRPs (Zero Interest Rate Policies)

  • But there’s few exciting national projects in the pipeline that address national productivity needs and ‘get pulses racing’:

    • In the UK, an exception has been the concept of a Northern Powerhouse being created in the North of England, merging Manchester and Liverpool into one mega-city with greatly improved physical and digital connectivity, and possibly extending this across the Pennines to include Leeds through to Hull – whether this will eventually materialise is another matter

    • There’s also plenty of austerity programmes ongoing but cost cutting of waste and wasteful activities is a limited exercise – once completed, those gains cannot be repeated

  • The fact is that all governments need a long term plan for growth – and one they publish so electorates know what to expect

National productivity measures

There are three measures of national productivity on offer from the UK’s ONS – Office for National Statistics Output per hour worked – the most popular measure: Reflects the international differences in hours worked, holiday entitlements and the flexibility of the labour market including part-time and other alternative work patterns More relevant to time than …

NHI – National Happiness Index

Jeremy Bentham, the 18th century UK economist said: “Government action should make the most people happiest” Bhutan don’t even bother to measure their GDP, preferring to use GNH – Gross National Happiness – as its measure of national well-being Why? If people are happy, they tend to spend more which enlarges national GDP pies They …

NKI – National Knowledge Index

A good NKI would show whether a nation had a competitive edge with its knowledge resources and whether further investment was needed in education, R&D or intellectual property legislation, say  However, as with NHIs, there are few useful NKIs available  An example is the one used by India               …

Action ongoing

Governments don’t determine most of national productivity levels – business managers do However, governments can do many things to help those managers, as follows:                  

Action needed – Overall

1. Establish a National Productivity Centre – NPC: Clearly, all governments should take national productivity improvement very seriously – the potential benefits are £300 billion per annum for the UK alone! Each NPC should be independently funded so it cannot be swayed for any party political reasons – and it should be staffed by top …

Action needed – Private sector

Clusters: Clusters are ‘geographically proximate groups of interconnected companies, suppliers, service providers and associated institutions in a particular field’ – they need a sizeable local population, nearby universities and research establishments, some suppliers and customers already there, and cheap and fast transport Clusters enable cities to be more productive than towns, and mega-cities more than …

Action needed – Public sector

All governments must cut their cloth to what their public can afford – basic guidelines for their actions should be: Ration services to only those the public deem to be essential Target sector-wide improvements of 20% or more, not 1 to 2% Focus on less waste before less service Invest more to improve ‘core’ infrastructure, …

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